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02/08/2013

Tax Breaks Available for Supporting Elderly Parents

It’s that time again – Uncle Sam is knocking on your door
and ready to collect taxes. If you have been caring for an elderly parent, you
may find that Uncle Sam can actually help with some of those care costs through
favorable tax treatment. Depending upon your circumstances, you may be able to
claim your parent as a dependent, take a dependency care tax credit, deduct a
portion of their medical expenses, or get some combination of these tax breaks.

Sadly, caregiving frequently also means managing end-of-life
care . . . and the attendant expenses. While it may be difficult to focus on
financial matters during these stressful times, tax breaks can help extend
available resources. Of course, the first step is to determine which expenses
qualify and to what extent. Expenses that frequently apply to people with
advanced illness include health insurance premiums not paid through work,
deductibles, co-pays, medication, alternative care, medical supplies such as
bandages, dental care, Medicare B premiums, lodging while traveling for care,
and transportation costs. The IRS has a very detailed list of what is and isn’t
deductible in Publication 502. You can refer
to this publication for details, as well as to another excellent Forbes
article, “Save Money On Taxes At The End Of Life -- How
And Why It Matters.”

Taxes can be tricky, so make sure you ask your accountant
for tax assistance if you think you may have qualifying expenses. The tax
savings will be well worth your time.